Welfare system must be reformed
The current social security system is a mixture of complicated schemes which have evolved over time and without enough cohesion to adequately protect people in need or to incentivise people to seek jobs based on what they can earn.
The effect of a benefits cap on the value of going to work has built the unpopular benefits trap.
The UK government has approved the Welfare Reform Bill. For Northern Ireland, the immediate question for the Executive is how to respond.
For two reasons, the Executive should broadly follow the legislation. First, because the main thrust of the legislation is logical, carefully crafted, and offers a fairer overall system of social security. Second, because to diverge from the main parity principles would be potentially either very expensive for the Executive or, if some social security benefits were lower than Britain, would disadvantage local people.
The Northern Ireland Council for Voluntary Action (NICVA) has been following the progress of the legislation and, with appropriate timing, brought together a very large representative audience from its members to consider the implications of following the legislation and to identify specific local issues.
The debate at NICVA started with apprehension. Much of the initial discourse has been in terms of disadvantage, fears of cuts in benefits, and suspicion the legislation is inappropriate to a low income, high benefit-dependent, region like Northern Ireland.
Early publicity, some based on the work of the Institute of Fiscal Studies, pointed to the possible pain of the welfare reforms being greatest in the London region (influenced heavily by the reshaping of housing benefit) but with Northern Ireland being the next most seriously affected region.
These fears have some justification. However, the fears and concerns need to be assessed in the context of all the reforms. There is a strong case to be made in favour of the central principles of the reform. A simpler, more readily understood, system of benefits is long overdue and, when implemented next year the scheme will transform a nightmare matrix of benefit schemes and tax measures to introduce a progressive benefits structure.
Individuals receiving benefits will find that, if they move into paid employment, benefit will be phased out as incomes rise. The current system of marginal tax (or benefit loss) where rational behaviour pointed to too many situations where 'it did not pay to take work', will give way to a tapered addition of 35% of new income being retained until income is outside the influence of benefits.
Why then would political parties here or other interest groups still need to be persuaded? Northern Ireland's political parties might agree with the principles but ask questions about their application. If the principles are accepted, there are several wide-ranging local arguments.
Is Northern Ireland different or a special case in terms of social need? Have the Troubles left an inheritance of trauma, mental illness and the costs of division?
The biggest single factor pushing up the cost is the way in which DLA (disability living allowance) has been awarded. The numbers in Northern Ireland are nearly double the English average.
The Assembly will soon start to debate the introduction of welfare reform here. There are several features which can be adapted to cope with local needs. However, the principles of the reformed system should not be confused with debate about the merits of specific marginal local variations.